(Bloomberg) -- Alstom SA shares jumped after the troubled train maker moved to shore up its balance sheet to cope with continuing problems stemming from its acquisition of Canadian rival Bombardier Inc. 

The stock climbed as much as 11%, recovering an initial drop of 7.3% in early Paris trading on Wednesday. Alstom last year outlined a range of measures, including a share sale, after project delays in the UK. 

The €1 billion ($1.1 billion) capital increase, a new €750 million hybrid bond and asset sales are part of a plan to trim debt following a warning in October that wiped billions off the company’s valuation. The company’s credit outlook will be changed to stable after the closing of the equity sale and bond issuance, both expected no later than September, it said Wednesday, also detailing a reassuring outlook. 

“While many of the details of the de-levering plan are as expected, we think the announced actions should be well received,” Citigroup analysts led by Martin Wilkie said in a note.  

Alstom also reported a wider adjusted net loss of €309 million for the fiscal year through late March and doesn’t plan to pay a dividend for the period. The French manufacturer is set to work on new efficiency measures, including cuts to indirect procurement costs, Chief Executive Officer Henri Poupart-Lafarge said in a statement.

The company’s main shareholders, Canadian pension manager Caisse de dépôt et placement du Québec and French state-owned investment firm Bpifrance, which own almost 25% of capital together, will both subscribe to the capital increase.

Alstom had negative free cash flow of €557 million for the year compared with positive €199 million for the previous year. It expects free cash flow of as much as €500 million for the current fiscal period. 

“Management guides for cash generation, improving margins and a growing backlog this year, which should also support credit metrics,” Bloomberg Intelligence analyst Stephane Kovatchev wrote in a note. 

UK Warning

The company has been reeling in the aftermath of slashing its cash-flow outlook last year after delays to a project in the UK, named Aventra, a contract inherited from the $5.5 billion acquisition of Bombardier more than three years ago. It includes 443 trains that serve the London Overground and Elizabeth Line among others. The warning erased as much as €3.1 billion from the company’s share price in a single day. 

As part of the plan to reduce net debt by €2 billion by March 2025, Alstom has divested about €700 million in assets, including its US signaling business for about €630 million. 

More asset sales are likely, according to Bloomberg Intelligence analyst Mustafa Okur while UBS’ Andre Kukhnin had expected an equity raise between €500 million to €1 billion.

The transportation giant, which supplies most of France’s trains and metros, has about 80,000 employees and a presence in 63 countries.

--With assistance from Valentine Baldassari.

(Updates with analyst comment in fourth paragraph)

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